Expansion of liquor licenses in Boston faces pushback from restaurant group

City Council will continue to debate the best approach to new licenses this spring

Dan Newcomb, a liquor license broker based in Marshfield, said that before COVID-19 hit, the going price for a transferable all-alcohol license in Boston was at least $450,000, and a minimum of $150,000 for a beer-and-wine license.Associated Press/File

The coronavirus has temporarily shut down most of the restaurant industry here. The age-old debate over liquor licenses in Boston? Not even a pandemic can stop that, apparently.

A Boston City Council committee on Tuesday went ahead with a scheduled hearing over whether to issue new liquor licenses, with councilors and others chiming in via Zoom from their homes.

The councilor chairing the hearing, Lydia Edwards, proceeded despite a request from Bob Luz, president of the Massachusetts Restaurant Association, to table the debate until after the public health crisis has subsided. He fears that flooding the market with new licenses would devalue existing ones, making the recovery harder for cash-strapped restaurateurs.

Edwards says the wheels of city government still need to turn. Expanding the number of licenses in Boston, she said, might help some small-business owners get back on their feet by offering them a potentially new revenue source after the health care crisis is over.

At the heart of this debate: Boston’s infamous cap on the number of liquor licenses. This limit drives up their value; many sold for more than $400,000 in pre-pandemic times. The problem? Several neighborhoods have largely missed out on Boston’s restaurant boom, as developers and restaurateurs in wealthier parts of the city pay top dollar to secure the available licenses.

The City Council’s government operations committee is weighing two measures that would build on state legislation passed in 2014 that made 75 nontransferable licenses available in Boston, outside the core downtown area, over three years. Mayor Marty Walsh is seeking approval to issue another 184 nontransferable licenses in the city over three years, while Councilor Frank Baker filed a proposal for 150 neighborhood licenses, over the same time frame.

In reaction to the restaurant group’s concerns, Baker offered a compromise during the Zoom call: a one-time injection of 33 new nontransferable licenses, spread evenly among 11 neighborhoods.

Edwards wants to hash out a version, based on the proposals from Walsh and Baker, in discussions with her colleagues next month. The hope is to have something delivered to the Legislature before August. Like previous liquor-license expansions, this one needs to go through Beacon Hill first.

Edwards said this measure is all about giving Boston officials more control over the city’s economic destiny. The current system, she said, is badly in need of fixing, particularly with regard to lower-income neighborhoods. Had the mayor’s measure become law before the pandemic, she said, maybe more restaurants would be better able to withstand the current crisis, because they could offer alcohol sales with their takeout and delivery orders. She said she sees nontransferable licenses as one useful tool to help the restaurant industry rebound, once the health emergency subsides.

Josh Weinstein, owner of the Quiet Few tavern in East Boston, spoke in favor of expansion on the council call, saying more licenses would translate to more jobs once the recovery gets underway.

But Luz said the negative impact to the economy would far outweigh any positives. Few sectors have been hit harder by the pandemic-related shutdowns. When restaurants finally open back up, Luz said, many will likely need to significantly shrink their seating capacity to lessen crowds and address health concerns. He doesn’t oppose new licenses in neighborhoods without a vibrant dining scene — like, say, Mattapan — but new competition could make it tough on existing restaurants trying to get restarted in parts of the city already blessed with numerous options.

Dan Newcomb, a liquor license broker based in Marshfield, said in an interview that before COVID-19 hit, the going price for a transferable all-alcohol license in Boston was at least $450,000, and a minimum of $150,000 for a beer-and-wine license. Inevitably, those prices will drop, post-pandemic, as demand eases and some are sold off in bankruptcies. Newcomb said he has more than 15 licenses for sale right now in Boston, but there’s zero interest while the industry is in lockdown mode.

Newcomb suspects the hit from the coronavirus will be so strong, 20 to 30 percent of all restaurants in the state won’t ever reopen.

John Barros, Walsh’s economic development chief, offered a similarly depressing prognosis: He suspects the fatality rate among the city’s restaurants could approach 25 percent. (Luz fears it could be even higher.) Barros joined the call to explain the mayor’s reasoning for his proposal — the latest version was filed in January 2019, long before the pandemic hit — but added that the administration right now faces more pressing issues just keeping small businesses afloat these days.

Everyone in this debate agrees on one thing: The economic damage will be brutal and unsparing to the industry. Finally reaching a consensus on how to best expand Boston’s available liquor licenses? Good luck with that one.